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Soumik Dey
Soumik Dey

fly ash

GST makes environment-friendly building plans costlier

PTI6_1_2017_000044B (File photo) Finance Minister Arun Jaitley

While inaugurating the newly renovated Vadodara airport earlier this year, Prime Minister Narendra Modi had said his government encourages use of environment friendly building materials in infrastructure development, as was done in the case of the newly renovated airport.

In his Union budget announcement and before that, Finance Minister Arun Jaitley had asserted that GST would provide protection to those industries that are in environment friendly businesses. "Such units will have a distinction from say a non-environment friendly unit under the GST structure," Jaitley had said.

However, despite all the good intentions of the Narendra Modi administration, under the GST environment friendly fly ash bricks and building materials now faces a tax burden that is almost five times more from its existing rate.

What is even more interesting is that the GST rate structure does acknowledge the importance of cheaper building materials in its largely government-led infrastructure development drive.

Hence, as per the announced rates for commodities, the top-soil depleting, coal fumes and ash generating conventional brick kilns have been brought down from a 12 per cent central excise duty to five per cent under GST.

"This new GST rates on fly ash products have become a headache for power plants where they are spending large amount of money to control fly ash generated from coal burning," said a Power Ministry official.

"Plants are reporting that lifting of fly ash, for which some incentives are also provided by NTPC and the others, have almost stopped," the official said.

The Power Ministry, in a letter to Hasmukh Adhia, revenue secretary, have pointed out the anomaly in the rate structure. India currently has fly ash stock to last for the next 50 years even if the power plants stopped using coal from today, a power industry analogy suggests.

"This anomaly will discourage use of environment friendly fly ash bricks and other fly ash based products in the construction sector," wrote P.K.Pujari, power secretary, in his May 30 communication addressed to the revenue secretary.

"I may also mention here that Sectoral Group of Secretaries on Energy and Environment constituted by the Honb'le Prime Minister, in its final report has also recommended tax/duty exemption for fly ash based products used in construction," Pujari added in his letter, seeking exemption of fly ash construction products from GST.

Meanwhile, the fly ash industry has pointed out that the new tax structure would make their products unviable vis-a-vis the environment unfriendly traditional red brick.

"We do not seek any benefit but seek to be taxed equally like bricks and traditional construction materials at the least. If this high tax rate continues, we will have to shut shop and close this business," said Avinash Pareek, secretary, National Association of Fly Ash Manufacturers.

Meanwhile, the Ministry of Environment and Forest has also written to the revenue department under Finance Ministry, seeking to incentivise the environment friendly construction material sector and recommended exemption under GST as well.

All eyes are now on the GST council meeting scheduled for June 3, where rate structure of most commodities would be finalised by the council chaired by Jaitley.

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Topics : #GST | #Arun Jaitley

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